The cost to purchase one Ethereum (ETH) token surged to its two-year high in the days leading up to its transformation into a proof-of-stake asset.
The ETH/USD exchange rate [almost] hit $600 on Monday following a 6.21 percent upside move, its highest level since May 2018. Traders apprehensively increased their bullish bets on the pair after anticipating a supply deficit in the Etherum market.
In retrospect, Ethereum expects to undergo a major network upgrade under the title of Ethereum 2.0. The technical advancement will increase its blockchain’s scalability, energy efficiency, and security without compromising its inherent decentralization.
Meanwhile, Ethereum 2.0 also proposes to change ETH as an asset. The upgrade will mainly attach three subclass attributes to the native token: that of Capital Assets, Commodities, and Stores of Value.
The Ethereum Foundation requires the ETH users to stake their holdings into a smart contract that would activate the ETH 2.0 mainnet. On the whole, the contract requires 524,288 ETH tokens. In return, it will provide stakers with attractive annual returns.
As of Monday, the ETH 2.0 smart contract has collected about 50 percent of its targeted amount. If it successfully obtains 524,288 ETH by today, then the team will launch ETH 2.0 on December 1. Failing to collect the required number of Ethereum tokens will either delay the launch.
The closer we get to 100% of 524K threshold, the higher the price of $ETH… pic.twitter.com/NO3uCVLoJU
— SpartanBlack (@SpartanBlack_1) November 23, 2020
Escalating ETH deposits will remove a small portion of the tokens out of circulation. The supply deficiency, coupled with Ethereum rewards, could prompt more ETH holders to deposit their holdings into the ETH 2.0 smart contract. That somewhat explains why ETH/USD is rallying upwards.
“A steadily rising ratio signals the community’s confidence in ETH 2.0 and the fact that people are willing to forego higher yields elsewhere to bet on the future of Ethereum,” explained a member of the Spartan Group, a crypto-focused asset management platform.
Ethereum is practically looking at a resistance-free zone as it eyes a further extension of its upside momentum.
Ethereum is trading upwards towards $800. Source: ETHUSD on TradingView.com
The trade setup against supportive fundamentals looks like this: Ethereum trades upward inside a Rising Wedge pattern; it pulls back on testing the structure’s upper trendline towards the lower trendline (a Short strategy), and it bounces back towards the upper trendline on testing the lower trendline as support (a Long strategy).
The uptrend continues until the ETH/USD tests the Wedge’s apex, where the two trendlines converge. That level is roughly near $832, a level that acted as crucial resistance in April 2018. After testing it, ETH/USD would break out to the downside, falling by as much as the Wedge’s height (~$156).
Let’s block ads! (Why?)